LCP were commissioned by the Independent Generators Group (IGG) to quantify the value of interconnection to the GB both in terms of security of supply and to the system overall.
The contribution of interconnection to security of supply is highly contentious however the group wanted an independent and fair assessment around the impact of additional transmission connections with other markets.
We developed a Marginal Derating Factor to determine the value of incremental interconnector capacity to system security. This approach is based on calculating the amount of expected spare capacity in the connected markets during periods of supply shortage in GB. This crucially captured the effect of simultaneous tight margins in both markets due to correlations in demand and wind, which is not fully captured by the current methodology employed to calculate interconnector deratings.
Our EnVision modelling framework was then utilised to quantify the optimal level of interconnection to GB, the point at which whole system costs were minimised. This analysis allowed for the differences in the charging regimes faced by domestic generation relative to interconnection to be captured, including Carbon Price Support (CPS), Balancing System Use of system (BSUoS) and Transmission Network Use of System (TNUoS) charges.
The analysis was used by the IGG in its discussions with BEIS, National Grid and Ofgem.